Second drillship heads to Arctic; permits still to come

By Tim Bradner, Alaska Journal of Commerce

Published: 2012.08.31 01:27 AM

Shell Oil’s drillship the Noble Discoverer is under way to the Chukchi Sea, following the departure of the Kulluk Aug. 20. Shell is still waiting for inspections to be completed on a spill response barge now in Bellingham, Wash., and its final permits.

File/AJOC

Both of Shells’ drilling vessels are headed to the Arctic, but it’s still uncertain what the ships will do once they’re on location in the Chukchi and Beaufort seas.

Shell’s drillship Noble Discoverer departed Dutch Harbor in the Alaskan Aleutian Islands over the weekend of Aug. 25 and is now about halfway to the Chukchi Sea exploration site, Shell spokesman Curtis Smith said. The trip is expected to take six days in total.

Meanwhile, a second Shell drill vessel, the Kulluk, had left Dutch Harbor on July 20 and is now north of the Bering Straits on its journey to drill sites in the eastern Alaska Beaufort Sea, Smith said.

The Kulluk is a conical drilling unit designed for Arctic offshore drilling. It was built in the 1980s and was purchased by Shell. The Noble Discoverer is a conventional drillship that has been modified for Arctic summer conditions.

In a related development, Shell has asked the U.S. Interior Department for an extension of its Sept. 24 deadline for completing exploration wells in the Chukchi Sea.

Shell has also asked the Interior Department for permission to drill “top holes,” or partially-drilled wells, before the arrival of a specialized spill response barge now awaiting final U.S. Coast Guard inspections in Bellingham, Wash.

There has been no response yet to Shell from the Interior Department on the request.

In a statement, department spokesman Blake Androff said, “We continue to engage with Shell as they work to fulfill the conditions necessary to proceed with potential drilling activities in Alaska.”

“Any appoved activities that occur in the Chukchi or Beaufort Seas will be held to the highest safety, environmental protection and emergency response standards,” Androff said in the statement.

The Sept. 24 deadline requires Shell to cease any drilling into potential hydrocarbon-bearing zones and was imposed by Interior to allow time for oil spill cleanup operations, if a spill occurred, before winter ice moved into the area.

Shell has asked for an approximate two-week extension of the deadline.

Interior has set a later deadline, Oct. 31, for Shell’s drilling in the Beaufort Sea, another Arctic offshore exploration area the company hopes to test this year.

Smith said the government must still issue final drill permits and the two drilling vessels must also await the arrival of the spill response barge in Bellingham that is still awaiting final U.S. Coast Guard approvals. A sea trial of the barge, the Arctic Challenger, is expected to be done this week.

Once the two drillships are in the Chukchi and Beaufort seas, the vessels will be tethered to pre-positioned anchors to await final permission from the government to drill, Smith said. The Kulluk will also wait until local Inupiat whale hunters have finished their fall subsistence harvest of bowhead whales, which migrate through Shell’s Beaufort exploration area.

Shell has more than $4.5 billion invested in its Arctic exploration program but has been mired down, first by litigation and then delays in securing federal permits following the Deepwater Horizon disaster in the Gulf of Mexico in 2010.

Shell was initially delayed this year by heavy sea ice but more recently by delays in getting inspections done on the spill barge, which the government requires to be in place before drilling can begin.

The movement of the drill vessels is a milestone after the years of delay.

“The departure of the Kulluk and the Discoverer marks the first time working drilling rigs have chartered a course for the Beaufort and Chukchi Seas in over two decades,” Smith said. “It’s one of many operational milestones we hope to achieve in the days that remain in Alaska’s open water season.”

In the Chukchi Sea, Shell hopes to drill the Burger prospect, a discovery of gas and some oil made by the company in the early 1990s. The find wasn’t economic at the time, but having released the prospect and done more seismic, Shell now believes the prospect may be larger than first thought.

In the Beaufort Sea, Shell is drilling in a location where Union Oil of California made an oil discovery in the 1980s. That find, named Hammerhead by Union, was also not economic at the time.

Shell’s recent seismic shows the area to be very prospective, however. Also, the construction of a pipeline east from the Prudhoe Bay field to the Badami field, and plans for extension of the pipeline to Point Thomson in 2015, have improved chances that Shell’s Beaufort Sea prospects will be commercial.

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